Despite rising competition from Microsoft’s Azure and Google’s cloud service, Amazon Web Services still reigns supreme in the cloud computing industry.
And in a note published Wednesday, Goldman Sachs reminded investors once again that AWS leads its Microsoft and Google counterparts by a wide margin in terms of revenue.
As shown in the chart below, AWS has generated $8.9 billion over the past 12 months, more than quadruple Microsoft’s $1.8 billion and 15 times the sales of Google’s cloud service. What’s more impressive is that AWS is still seeing a whopping 72% year-over-year growth, an unprecedented growth rate for any enterprise service of its scale.
These numbers should be seen with a bit of a grain of salt because they are estimates for Microsoft and Google, who don’t break out revenue for their cloud computing services. Microsoft also has a multi-billion dollar cloud software business that’s not looped into these estimates. AWS launched its service much earlier than the two companies, which naturally gave it a sizeable lead to begin with, as well.
Still, AWS’s numbers are pretty staggering. And it doesn’t look like it will give up its lead anytime soon. Goldman Sachs estimates AWS will report another 58% year-over-year revenue growth when it discloses its second quarter earnings Thursday, and forecasts a slightly higher 60% year-over-year growth in the third quarter. AWS recorded $2.5 billion in revenue in the first quarter, or about 10% of total revenue, but still accounted for roughly 40% of the company’s total profit.
“We believe the rapid pace of migration of workloads to the cloud and Amazon’s accelerated investments in expanding Availability Zones in 2016 could accelerate AWS revenue growth starting in the second half of 2016,” Goldman Sachs wrote.
Amazon has reported profits for four straight quarters (an anomaly for a company known for investing in growth at a loss) and had its largest quarterly profit ever in the first quarter of this year. If AWS continues to grow at this rate and keeps up its fat margins (~28% operating margin), Amazon could be on its way to having another record profit quarter when it discloses its numbers Thursday afternoon.
Here’s what analysts are expecting, according to Yahoo Finance:
- Q2 earnings per share (EPS): $1.11, up from $0.19 in Q2 2015.
- Q2 Revenue: $29.56 billion, up 27.5% from $23.18 billion in the year-ago period.
Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.
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